Environmental water incentive policy and return flows

Abstract

[1] With increasing urban, industrial, and agricultural water demand and projected reduced supply under climate change, allocations to the environment are critically low in many arid and semiarid basins. Consequently, many governments are striving to augment environmental flows, often through market-oriented mechanisms that involve compensating irrigated agriculture, the largest water user in most basins, for reducing diversions. A widely documented challenge with policies to recover water for the environment arises because part of the water diversion reduction can form the basis for downstream consumptive water rights or environmental flows. This article gives an empirical comparison of two incentive policies to acquire water for environmental flows for a part of the Murray-Darling Basin (MDB), Australia. One policy consists of paying irrigators and water delivery firms to make capital and management investments that improve on-farm irrigation and water-conveyance; the other policy consists of having the government buy water from irrigators on the active MDB water market. The results show that the first option results in relatively larger return flow reduction, while the second option tends to induce significant irrigated land retirement with relatively large reductions in consumptive use and small reductions in return flow. In cases where irrigation losses result in little useful return flow (e.g., evaporative loss reduction or during drought in some instances), efficiency-improving investments may provide some cost-effective opportunities. Where a large portion of loss forms valuable return flow, it is difficult to make a case for the cost-effectiveness of policies involving payments for investments in irrigation and conveyance system upgrades.

Literature Review on Rebound Effect of Water Saving Measures and Analysis of a Spanish Case Study

“…Other authors give ambiguous results such as Dinar and Zilberman (1991), Qureshi et al (2010), Huffaker (2008) and Gómez and Pérez (2013) where the final result of water saving investment is ambiguous with the rebound effect that would be a function of water cost and water productivity and the implementation measures selected for financing the water savings policy.…”

“…Based on a mathematical programming model of the Murray Darling basin, Qureshi et al (2010) concluded that efficiency-improving investments could provide some costeffective opportunities, but also that the final net result is ambiguous and depends on the previous return flows and the use of the water savings. The critical element in most of the published research is the existence of a good water accounting framework.…”

Mercados De Agua Y Uso De Aguas Regeneradas. Aspectos Ambientales

“…Los mercados de agua reducen los caudales de los ríos porque se venden derechos de agua que anteriormente no se utilizaban, pero también porque se generan ganancias de eficiencia de riego en parcela que reducen los retornos de riego de cuenca (Quereshi, M. et al, 2010). La razón es que se transfiere agua de zonas de baja eficiencia poco rentables a zonas de alta eficiencia más rentables, por lo que caen los retornos de riego.…”

Water Markets in Spain: Performance and Challenges

“…For consumptive water uses, such as irrigation, the maximum tradable water is the average volume of water actually consumed. This effective consumption is calculated as the difference between the volume of water extracted from the source and the return flows, taking into account the efficiency in the transportation, distribution and crop watering [18][19][20]. Regardless of the average volume of water actually used, the volume of water transferred cannot exceed the amount of water allocated by the corresponding River Basin Authorities (RBA) on the basis of the hydrological year.…”